Chapter 56: A negative example
After giving a couple of instructions over there, Tang's father walked over. Li Lan said quietly to Su Can, "Aren't you studying management? You could learn something from our experience selling a large development like this, and how we supervise and manage quality. People in real estate used to say they wouldn't touch anything with a profit margin below forty percent. But Mr. Tang said that was unrealistic. It was like trading in the eighties, when profits could reach eighty percent. It was an exciting business. Then more people got involved, and margins fell step by step. These days, a profit margin of around five percent is perfectly normal in imports and exports. But after living through the days when eighty-percent margins made people rich overnight, some people aren't willing to do it now. Who can settle down and keep at it? That's why our approach to real estate has always been not to hoard land and raise prices as it appreciates, but to develop quickly and recover our capital quickly. And there's another rule: we don't take profits above twenty-five percent. Who in real estate doesn't want a profit? But we don't insist on squeezing one out. It's the same principle as getting along with a woman. If she's yours, you ought to take good care of her. You have to nurture this market. If you're planning to drop your pants, have your fun, and leave, you clearly aren't planning to stay in this business for long."
Su Can nodded. After 1992, the real estate industry's average profit curve had begun climbing steadily. For a company head like Tang's father, whose business also encompassed real estate, to hold such views meant he really had weathered several industry tides, advanced one solid step at a